Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching, and Program Income Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C Federal Agency: Department of Health and Human Services Pass-Through Entity: Monterey County Area Agency on Aging Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the recipient’s financial management system must provide for the following: Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, as well as expenditures and income. All records must be supported by source documentation. There must be written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. 2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The organization does not have an effective reconciliation and review process required to track compliance requirements that adhere to Uniform Guidance and the grant terms. Match expenditures could not be reconciled to the Service Invoice Summaries. In addition, the methodology used to allocate program income, matching, and non-payroll expenditures was not consistently applied. Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting matching requirements per grant terms, and potential for program income to be understated or overstated. Questioned Costs: Related questioned costs are unknown. Context: During the year under audit, the issues represent a systemic problem. Recommendation: We recommend the Organization implement policies and procedures to ensure proper reconciliation and review of Service Invoice Summaries are effective and specific to grant View of Responsible Officials: In response to finding number 2024-002, there is no disagreement with the audit finding. Management is in the process of drafting new policies and procedures to ensure that the amount, source, and expenditure of Federal funds for all Federal awards is identified; and will track and verify expenditures and income. In addition, Management is developing a process and procedures to verify compliance with Federal statues, regulations, and the terms and conditions of each Federal award. Management will complete the Corrective Action Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.
2024 – 002: Special Tests and Provisions Federal Agency: U.S Department Education Federal Program Name: Education Stabilization Funds Assistance Listing Number: 84.425D, 84.425U Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425D210013, S425U210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Other Matters Criteria or specific requirement: Per 2 CFR 200.303, "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ‘Standards for Internal Control in the Federal Government’ issued by the Comptroller General of the United States or the ‘Internal Control Integrated Framework’ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). If governors, SEAs, and or subrecipients propose to use ESF funds for construction they must also comply with applicable requirements in 34 CFR section 76.600 and 34 CFR sections 75.600–617. Approved construction projects must comply with all other applicable Uniform Guidance requirements, as well as the ED’s regulations regarding construction, as applicable, at 34 CFR section 76.600. As is the case with all construction contracts using laborers and mechanics financed by federal education funds, recipients and subrecipients that use ESF funds for construction contracts over $2,000 must meet Davis-Bacon prevailing wage requirements. Condition: PLA did not verify compliance with prevailing wage requirements with subcontractors for construction projects financed by federal education funds. Questioned costs: $365,489. Context: 1 of 1 construction projects financed by federal education funds were subject to prevailing wage requirements. Cause: PLA was not familiar with using federal education funds for construction costs and were not aware of the prevailing wage requirements Effect: Laborers and mechanics paid by subcontractors may have been paid below prevailing wage rates. Repeat Finding: Yes – 2023-002. Recommendation: We recommend that for future construction contracts financed by federal education funds PLA verify that subcontractors comply with prevailing wage requirements. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 002: Special Tests and Provisions Federal Agency: U.S Department Education Federal Program Name: Education Stabilization Funds Assistance Listing Number: 84.425D, 84.425U Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: S425D210013, S425U210013 Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Other Matters Criteria or specific requirement: Per 2 CFR 200.303, "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ‘Standards for Internal Control in the Federal Government’ issued by the Comptroller General of the United States or the ‘Internal Control Integrated Framework’ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). If governors, SEAs, and or subrecipients propose to use ESF funds for construction they must also comply with applicable requirements in 34 CFR section 76.600 and 34 CFR sections 75.600–617. Approved construction projects must comply with all other applicable Uniform Guidance requirements, as well as the ED’s regulations regarding construction, as applicable, at 34 CFR section 76.600. As is the case with all construction contracts using laborers and mechanics financed by federal education funds, recipients and subrecipients that use ESF funds for construction contracts over $2,000 must meet Davis-Bacon prevailing wage requirements. Condition: PLA did not verify compliance with prevailing wage requirements with subcontractors for construction projects financed by federal education funds. Questioned costs: $365,489. Context: 1 of 1 construction projects financed by federal education funds were subject to prevailing wage requirements. Cause: PLA was not familiar with using federal education funds for construction costs and were not aware of the prevailing wage requirements Effect: Laborers and mechanics paid by subcontractors may have been paid below prevailing wage rates. Repeat Finding: Yes – 2023-002. Recommendation: We recommend that for future construction contracts financed by federal education funds PLA verify that subcontractors comply with prevailing wage requirements. Views of responsible officials: There is no disagreement with the audit finding.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
Material Weakness Federal Program(s): Research and Development Cluster Mental and Behavioral Health Education and Training Grants Assistance Listing Number(s): Research and Development Cluster • 11.417 • 12.420 • 12.905 • 84.116Z • 84.019A • 47.076 • 47.050 Mental and Behavioral Health Education and Training Grants • 93.732 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Timesheets and time and effort reports used to track time spent on federal programs did not have approval signatures by the employee’s supervisor. Cause: Ineffective design and implementation of internal controls around approval of timesheets and time and effort reports. Effect or Potential Effect: Ineffective control procedures could result in unallowable costs or activities being charged to federal grant programs. Questioned Costs: None Context: In our sample of 10 payroll transactions of amounts charged to the Research and Development Cluster, 9 of the timesheets or time and effort reports did not have physical indication of review by their supervisors. In our sample of 6 payroll transactions of amounts charged to the Mental and Behavioral Health Education and Training grants, none of the timesheets or time and effort reports had physical indication of review by their supervisors. Repeat Finding: No Recommendation: We recommend the College enforce its policy to have physical signatures on each employee’s timesheet or time and effort report after the review takes place to ensure salary costs charged to the federal program are allowable. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
2024-007: Student Credit Balances from Title IV Awards Significant Deficiency Federal Program: Student Financial Assistance Cluster Assistance Listing Number(s): Student Financial Assistance Cluster • 84.007 • 84.033 • 84.038 • 84.063 • 84.268 • 84.379 • 93.925 Criteria: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Award Requirements, Section 200.303 – Internal Controls, requires the auditee to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonfederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: When Title IV funds are credited to a student account and they exceed the amount of tuition and fees, food and housing, and other authorized charges assessed the student, a credit balance is created. The institution must pay the resulting credit balance directly to the student or parent borrower within 14 days after (1) the first day of class of a payment period if the credit balance occurred on or before that day, or (2) the balance occurred if that was after the first day of class. The College does not have a control in place with physical indication of review over refund process for student credit balances. Cause: Lack of control in place over refunds from student credit balances Effect or Potential Effect: Student credit balances may not be refunded within the 14-day requirement. Questioned Costs: None Context: During our control assessment over student credit balance refunds, we noted there is no control in place and no physical indication of review taking place to ensure student credit balances are properly refunded within the 14-day requirement. Repeat Finding: No Recommendation: We recommend the College review its process and controls in place for student credit balances to include an independent review and sufficient documentation to support the application of the control. Views of Responsible Officials: Management agrees with the finding. See corrective action plan.
(2024-016) Title: Internal control over Unemployment Insurance financial reporting needs improvement Prior Year Findings: None State Department: Labor Administrative and Financial Services State Bureau: Unemployment Compensation Security and Employment Service Center Office of the State Controller Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: See E-77 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; State Administrative and Accounting Manual (SAAM) Chapter 80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. The Office of the State Controller (OSC) has the responsibility to develop and maintain a system of internal controls and procedures to check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies for accounting and financial controls. Condition: The Security and Employment Service Center (SESC) is responsible for recording accounting transactions and reconciling balances between Federal funds and the State-funded Unemployment Insurance (UI) program under the Employment Security Fund (ESF). SESC is required to periodically record transfers of revenues and expenditures between Federal and State funds, which are separately presented in the State’s financial statements, but combined for SEFA reporting purposes. OSC compiles information collected from SESC in year-end closing packages for financial and SEFA reporting purposes. The Office of the State Auditor’s (OSA) audit of year-end account balances and related SEFA reporting identified a deposit of $11.6 million, representing a transfer between Federal and State UI funds, that was not accurately recorded. This resulted in the following errors: • ESF Cash & Short-Term Investments was overstated by $11.6 million, and Restricted Deposits & Investments was understated by $11.6 million on the State’s financial statements. • SEFA expenditures were overstated by $11.6 million. OSA proposed an audit adjustment to reclassify and correct the balances on the State’s financial statements and SEFA. The adjustment was recorded by OSC. Context: Before OSA’s proposed audit adjustment: • ESF Cash & Short-Term Investments and Restricted Deposits & Investments totaled $13 million and $735.2 million, respectively. • SEFA expenditures for the UI program totaled $150.7 million. Cause: Lack of supervisory oversight Effect: Before OSC corrected year-end account balances and related SEFA reporting: • ESF asset balances on the State’s financial statements were misclassified. • total expenditures reported on the SEFA were inaccurate. The SEFA is submitted to the Federal government, and errors in reporting may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that SESC and OSC enhance supervisory oversight to ensure that balances reported on the State’s financial statements and SEFA are accurate. Corrective Action Plan: See F-11 Management’s Response: The Department agrees with this finding. The department will further expand the procedures used to prepare and review the SEFA. Contact: Marilyn Leimbach, Director, Security and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 24-0308-02)
(2024-016) Title: Internal control over Unemployment Insurance financial reporting needs improvement Prior Year Findings: None State Department: Labor Administrative and Financial Services State Bureau: Unemployment Compensation Security and Employment Service Center Office of the State Controller Federal Agency: U.S. Department of Labor Assistance Listing Title: Unemployment Insurance (UI) (COVID-19) Assistance Listing Number: 17.225 Federal Award Identification Number: See E-77 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.510; Governmental Accounting, Auditing, and Financial Reporting (GAAFR), Part 5, Section A: Internal Control; State Administrative and Accounting Manual (SAAM) Chapter 80 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the State’s financial statements which must include the total Federal awards expended. At a minimum, the SEFA must provide total Federal awards expended for each individual Federal program. The GAAFR states that a comprehensive framework of internal control is required to obtain reasonable assurance over financial reporting. The Office of the State Controller (OSC) has the responsibility to develop and maintain a system of internal controls and procedures to check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies for accounting and financial controls. Condition: The Security and Employment Service Center (SESC) is responsible for recording accounting transactions and reconciling balances between Federal funds and the State-funded Unemployment Insurance (UI) program under the Employment Security Fund (ESF). SESC is required to periodically record transfers of revenues and expenditures between Federal and State funds, which are separately presented in the State’s financial statements, but combined for SEFA reporting purposes. OSC compiles information collected from SESC in year-end closing packages for financial and SEFA reporting purposes. The Office of the State Auditor’s (OSA) audit of year-end account balances and related SEFA reporting identified a deposit of $11.6 million, representing a transfer between Federal and State UI funds, that was not accurately recorded. This resulted in the following errors: • ESF Cash & Short-Term Investments was overstated by $11.6 million, and Restricted Deposits & Investments was understated by $11.6 million on the State’s financial statements. • SEFA expenditures were overstated by $11.6 million. OSA proposed an audit adjustment to reclassify and correct the balances on the State’s financial statements and SEFA. The adjustment was recorded by OSC. Context: Before OSA’s proposed audit adjustment: • ESF Cash & Short-Term Investments and Restricted Deposits & Investments totaled $13 million and $735.2 million, respectively. • SEFA expenditures for the UI program totaled $150.7 million. Cause: Lack of supervisory oversight Effect: Before OSC corrected year-end account balances and related SEFA reporting: • ESF asset balances on the State’s financial statements were misclassified. • total expenditures reported on the SEFA were inaccurate. The SEFA is submitted to the Federal government, and errors in reporting may result in incorrect information used for programmatic, policy, or statistical purposes. Recommendation: We recommend that SESC and OSC enhance supervisory oversight to ensure that balances reported on the State’s financial statements and SEFA are accurate. Corrective Action Plan: See F-11 Management’s Response: The Department agrees with this finding. The department will further expand the procedures used to prepare and review the SEFA. Contact: Marilyn Leimbach, Director, Security and Employment Service Center, DFPS, DAFS, 207-248-2556 (State Number: 24-0308-02)
(2024-022) Title: Internal control over SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $12,335 Likely Questioned Costs: Undeterminable; incorrectly calculated Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to clients. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. A SNAP application form must be signed to establish a filing date and to determine the State agency’s deadline for acting on the form. The State agency shall not certify a household without a signed form. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit calculations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system results to make eligibility determinations and related benefit calculations. The Office of the State Auditor (OSA) tested 60 household monthly benefit payments to verify the accuracy of SNAP operations utilizing ACES, and identified the following: • Nine overpayments of monthly SNAP benefits, including: o four benefit overpayments totaling $5,806; the Department was unable to provide documentation to support the maximum income limit requirement. o two benefit overpayments totaling $2,714 where the clients’ application for benefit renewal did not include SNAP; however, the households were open to SNAP benefits. o two benefit overpayments totaling $2,349 due to manual processing errors. o one benefit overpayment totaling $1,041; the client’s signature on their application was missing, which makes them ineligible for SNAP benefits. • One $395 underpayment of a monthly SNAP benefit due to manual processing errors • One household with an overpayment of $425 and an underpayment of $69 due to manual processing errors • Three households received accurate monthly benefit payments; however, asset and expense information were not accurately reflected within ACES. OSA selected a non-statistical random sample. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system interfaced, that result in adjustments to previously issued monthly SNAP benefits are appropriately processed. This includes a recalculation of previously issued benefits when case file modifications are processed, establishment of corresponding overpayments or underpayments, and related follow-up actions with households. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits may be incorrectly calculated, resulting in households being underpaid and/or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: • case information entered into ACES is accurate; • automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations; and • recalculations of previously issued benefits and related follow-up actions occur when case file modifications are retroactive. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. Of the 60 cases reviewed, 13 (21.67%) had errors in calculations or documentation. The Department is confident that the staff followed correct procedures in providing the TANF funded resource guide in the first four cases cited. The errors in these cases were merely a lack of documentation. The Department agrees with the calculation errors in the following 7 cases (11.67% of the 60 reviewed). The Department has developed a corrective action plan to ensure compliance moving forward. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The Department states that they are “confident that the staff followed correct procedures” for the four benefit overpayments totaling $5,806 and that “errors in these cases were merely a lack of documentation;” however, the Department cannot substantiate that staff followed established procedures if there is a lack of documentation to support adherence to procedures. The finding remains as stated. (State Number: 24-1108-04)
(2024-022) Title: Internal control over SNAP eligibility determinations and benefit calculations needs improvement Prior Year Findings: See schedule of Findings and Questioned costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $12,335 Likely Questioned Costs: Undeterminable; incorrectly calculated Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to clients. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.2 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP. A SNAP application form must be signed to establish a filing date and to determine the State agency’s deadline for acting on the form. The State agency shall not certify a household without a signed form. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit calculations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system results to make eligibility determinations and related benefit calculations. The Office of the State Auditor (OSA) tested 60 household monthly benefit payments to verify the accuracy of SNAP operations utilizing ACES, and identified the following: • Nine overpayments of monthly SNAP benefits, including: o four benefit overpayments totaling $5,806; the Department was unable to provide documentation to support the maximum income limit requirement. o two benefit overpayments totaling $2,714 where the clients’ application for benefit renewal did not include SNAP; however, the households were open to SNAP benefits. o two benefit overpayments totaling $2,349 due to manual processing errors. o one benefit overpayment totaling $1,041; the client’s signature on their application was missing, which makes them ineligible for SNAP benefits. • One $395 underpayment of a monthly SNAP benefit due to manual processing errors • One household with an overpayment of $425 and an underpayment of $69 due to manual processing errors • Three households received accurate monthly benefit payments; however, asset and expense information were not accurately reflected within ACES. OSA selected a non-statistical random sample. The Department does not have adequate policies and procedures in place to ensure that ACES case file modifications, whether manual or system interfaced, that result in adjustments to previously issued monthly SNAP benefits are appropriately processed. This includes a recalculation of previously issued benefits when case file modifications are processed, establishment of corresponding overpayments or underpayments, and related follow-up actions with households. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Known questioned costs • Potential future questioned costs and disallowances • Benefits may be incorrectly calculated, resulting in households being underpaid and/or overpaid. • Noncompliance with Federal regulations Recommendation: We recommend that the Department implement additional policies and procedures to ensure that: • case information entered into ACES is accurate; • automated eligibility determinations and benefit calculations are processed in accordance with Federal regulations; and • recalculations of previously issued benefits and related follow-up actions occur when case file modifications are retroactive. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. Of the 60 cases reviewed, 13 (21.67%) had errors in calculations or documentation. The Department is confident that the staff followed correct procedures in providing the TANF funded resource guide in the first four cases cited. The errors in these cases were merely a lack of documentation. The Department agrees with the calculation errors in the following 7 cases (11.67% of the 60 reviewed). The Department has developed a corrective action plan to ensure compliance moving forward. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The Department states that they are “confident that the staff followed correct procedures” for the four benefit overpayments totaling $5,806 and that “errors in these cases were merely a lack of documentation;” however, the Department cannot substantiate that staff followed established procedures if there is a lack of documentation to support adherence to procedures. The finding remains as stated. (State Number: 24-1108-04)
(2024-023) Title: Internal control over SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $11,080 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) used to determine eligibility for Federal assistance programs, including SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records, which includes Social Security Administration data. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. OSA obtained DOD information from MeCDC Vital Records and compared it to clients who received SNAP benefits during fiscal year 2024. OSA identified 214 cases where SNAP benefits were issued more than 75 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to monthly receipt of DOD information. OSA tested 43 of these SNAP cases and identified the following: • 16 single member household clients had EBT card purchase activity after DOD. Of these 16 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2024, resulting in unallowable costs totaling $11,080. Additional issues were noted for six of the 14 clients, as follows: • Two clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • One client’s EBT card was not deactivated upon receipt of DOD information. • Two clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. • One client’s case remained open 91 days after OFI was notified of the client’s DOD, resulting in three months of unauthorized SNAP benefit issuances. o two clients had transaction activity that occurred subsequent to fiscal year 2024. Of the two clients, one client was not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Eight clients with no EBT card purchase activity after DOD had additional issues noted, as follows: o For six clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 83 to 112 days after DOD. o One client’s benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. o One client’s EBT card was never deactivated and benefits were not expunged upon receipt of DOD information as required by OFI policies. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Of the 129,000 SNAP clients, 1,789 had a DOD in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies and required recoupment activities are pursued. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. In most cases cited the Department took appropriate action within the 45 days required by federal regulation related to IEVS information or within the 10-12-10 standard required for community complaints depending on the source of the information. The Department recognizes that some actions were lacking or could have been taken more quickly. A dedicated MaineCare Program Integrity Team is now working on the IEVS reports related to deceased members and has detailed SOPs for death matches. Based on the data improvements, this finding may continue to a small degree in the SFY 2025 audit and should be cleaned up in the SFY 2026 audit. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The exceptions noted in the Condition were identified within a sample of SNAP cases where benefits were issued more than 75 days following the client’s DOD. The 75-day benchmark was applied to include considerations of the monthly (30 day) receipt and the Federal program regulation (45 day). These cases demonstrate that the Department did not take appropriate action as required by Federal regulations in all exceptions identified. The finding remains as stated. (State Number: 24-1108-03)
(2024-023) Title: Internal control over SNAP deceased client cases needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $11,080 Likely Questioned Costs: Undeterminable; the Office of the State Auditor (OSA) tested a sample of cases where Supplemental Nutrition Assistance Program (SNAP) benefits were issued after the client’s date of death (DOD). Issuance of benefits to a deceased client does not necessarily result in unallowable program costs, as the issued benefits may not be expended; therefore, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.8 and .14 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. State agency action on information items about recipient households shall include review of information and comparison of it to case record information. State agencies must initiate and pursue actions on recipient households within 45 days of the receipt of the information items. States shall establish a system to verify and ensure that benefits are not issued to individuals who are deceased. Condition: The Office for Family Independence (OFI) manages the Automated Client Eligibility System (ACES) used to determine eligibility for Federal assistance programs, including SNAP. Information maintained in ACES is relied upon by OFI for determining monthly SNAP benefits issued to client Electronic Benefit Transaction (EBT) cards. OFI relies on numerous data sources for identifying and providing client DOD information for input into ACES, including monthly data exchanges with the Maine Center for Disease Control & Prevention (MeCDC) Vital Records, which includes Social Security Administration data. Federal program regulations require OFI to act on client cases within 45 days of receipt of DOD information. This includes review and comparison of DOD information to ACES case file information, and suspension of program participation and related benefits as warranted. OFI policies for SNAP require deactivation of the client’s EBT card as well as expungement of authorized benefits from the EBT card. If activity occurred on the client’s EBT card subsequent to the DOD, the case must be reported as potential fraud and referred for investigation. OSA obtained DOD information from MeCDC Vital Records and compared it to clients who received SNAP benefits during fiscal year 2024. OSA identified 214 cases where SNAP benefits were issued more than 75 days following the client’s DOD; this benchmark was applied to denote the 45-day Federal program regulation related to monthly receipt of DOD information. OSA tested 43 of these SNAP cases and identified the following: • 16 single member household clients had EBT card purchase activity after DOD. Of these 16 clients: o 14 clients had transaction activity after DOD that occurred in fiscal year 2024, resulting in unallowable costs totaling $11,080. Additional issues were noted for six of the 14 clients, as follows: • Two clients were not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • One client’s EBT card was not deactivated upon receipt of DOD information. • Two clients’ benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. • One client’s case remained open 91 days after OFI was notified of the client’s DOD, resulting in three months of unauthorized SNAP benefit issuances. o two clients had transaction activity that occurred subsequent to fiscal year 2024. Of the two clients, one client was not identified as potential fraud in the ACES case file. As a result, they were not referred for investigation as required by OFI policies. • Eight clients with no EBT card purchase activity after DOD had additional issues noted, as follows: o For six clients, the EBT card was never deactivated; therefore, benefits remained open and available for use 83 to 112 days after DOD. o One client’s benefits were not expunged upon receipt of DOD information as required by OFI policies; benefits were only expunged by the system-automated process based on inactivity after 274 days. o One client’s EBT card was never deactivated and benefits were not expunged upon receipt of DOD information as required by OFI policies. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. Of the 129,000 SNAP clients, 1,789 had a DOD in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Benefits issued to deceased clients may result in unauthorized EBT card purchase activity. • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to ensure that DOD information is received, reviewed, and updated in ACES on a more frequent basis to prevent unauthorized SNAP benefit issuances and EBT card purchase activity. In addition, we recommend that the Department review all client cases noted in the Condition of this finding to ensure that: • ACES case file DOD information is accurate; • SNAP benefits are expunged and EBT cards are deactivated in accordance with existing policies; • cases are identified as potential fraud and referred for investigation as warranted; and • unallowable costs are identified and reported to Federal oversight agencies and required recoupment activities are pursued. Corrective Action Plan: See F-13 Management’s Response: The Department partially agrees with this finding. In most cases cited the Department took appropriate action within the 45 days required by federal regulation related to IEVS information or within the 10-12-10 standard required for community complaints depending on the source of the information. The Department recognizes that some actions were lacking or could have been taken more quickly. A dedicated MaineCare Program Integrity Team is now working on the IEVS reports related to deceased members and has detailed SOPs for death matches. Based on the data improvements, this finding may continue to a small degree in the SFY 2025 audit and should be cleaned up in the SFY 2026 audit. Contact: Michael E. Downs, Senior Program Manager, SNAP, DHHS, 207-592-4850 Auditor’s Concluding Remarks: The exceptions noted in the Condition were identified within a sample of SNAP cases where benefits were issued more than 75 days following the client’s DOD. The 75-day benchmark was applied to include considerations of the monthly (30 day) receipt and the Federal program regulation (45 day). These cases demonstrate that the Department did not take appropriate action as required by Federal regulations in all exceptions identified. The finding remains as stated. (State Number: 24-1108-03)
(2024-024) Title: Internal control over automated SNAP eligibility certification periods needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $3,973 Likely Questioned Costs: Undeterminable; incorrectly suspending Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to households. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.10 and .12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP, which includes automatic cutoff of participation for households which have not been recertified at the end of their certification period. SNAP households must be assigned eligibility certification periods of at least six months unless the household is classified as exempt based on program regulations. The State agency must have at least one contact with each SNAP household every 12 months. Submission of periodic eligibility reports is required by non-exempt households. Non-exempt households that are certified for longer than six months must file a periodic report between four months and six months, as required by the State agency. In addition, the State agency must not require the submission of periodic reports by households certified for 12 months or less in which all adult members are elderly or have a disability and no earned income. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, including notification letters to clients when 6-month reports and 12-month redeterminations of eligibility are required. All SNAP households, except for elderly and disabled cases with no earned income, are required to submit 6-month reports. In addition, all SNAP households must undergo an annual redetermination of eligibility. Each household’s recertification requirements are indicated by date fields in the ACES case file. If a required report or redetermination is not completed by the date indicated in the applicable field, the case’s monthly SNAP benefit is automatically suspended by the system. The Office of the State Auditor (OSA) tested a sample of 20 cases automatically suspended for failure to complete a required review in fiscal year 2024 to verify the accuracy of automated SNAP operations utilizing ACES. In 14 of the 20 cases tested, OSA identified that ACES incorrectly suspended benefits, as follows: • One case was suspended four months after the 6-month reporting requirement, resulting in a known overpayment of $92. • One case was suspended one month after the annual redetermination requirement, resulting in a known overpayment of $535. • Six cases were underpaid SNAP benefits totaling $4,424 because of incorrect benefit suspensions, ranging from one to five months prior to the applicable 6-month reporting requirement. • Five cases were underpaid SNAP benefits totaling $4,206 because of incorrect benefit suspensions, ranging from five to ten months prior to the annual redetermination requirement. • One case was never required to submit 6-month reports or annual redeterminations since commencement of SNAP benefits in July 2022. This resulted in overpayments for the entirety of fiscal year 2024 totaling $3,346. The Department identified the overpayment in July 2024 but has not recouped it yet, thus OSA is questioning costs totaling $3,346. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. 213 clients were automatically suspended by ACES during fiscal year 2024 due to recertification or redetermination requirements. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • Automated SNAP eligibility system recertification and suspension criteria was not configured in accordance with Federal regulations. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • Benefits may be incorrectly suspended, resulting in households being underpaid or overpaid. Recommendation: We recommend that the Department enhance policies and procedures to ensure that automated SNAP eligibility certification periods and related ACES case file fields are properly configured to process benefits in accordance with Federal regulations. In addition, we recommend that the Department identify underpayments and/or overpayments resulting from recertification period errors and take action as warranted. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with the factual conclusions and calculations. The Department believes the necessary corrective action has been taken and will be reflected in the SFY25 audit. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 24-1108-02)
(2024-024) Title: Internal control over automated SNAP eligibility certification periods needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Special tests and provisions Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.551 $3,973 Likely Questioned Costs: Undeterminable; incorrectly suspending Supplemental Nutrition Assistance Program (SNAP) benefits may result in overpayments or underpayments to households. Since there are known overpayments and underpayments in our sample, a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 272.10; 7 CFR 273.10 and .12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. All State agencies must sufficiently automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing and transmitting information concerning SNAP, which includes automatic cutoff of participation for households which have not been recertified at the end of their certification period. SNAP households must be assigned eligibility certification periods of at least six months unless the household is classified as exempt based on program regulations. The State agency must have at least one contact with each SNAP household every 12 months. Submission of periodic eligibility reports is required by non-exempt households. Non-exempt households that are certified for longer than six months must file a periodic report between four months and six months, as required by the State agency. In addition, the State agency must not require the submission of periodic reports by households certified for 12 months or less in which all adult members are elderly or have a disability and no earned income. Condition: SNAP is administered by the Office for Family Independence (OFI) and provides monthly benefits to eligible households to purchase nutritious foods. OFI is required by Federal program regulations to utilize an automated information system for SNAP. The information system must maintain all case file information necessary to properly process eligibility determinations and benefit computations. The Automated Client Eligibility System (ACES) is the information system used by OFI to automate SNAP operations. ACES relies on the maintenance of a complex framework of system rules to make eligibility determinations, including notification letters to clients when 6-month reports and 12-month redeterminations of eligibility are required. All SNAP households, except for elderly and disabled cases with no earned income, are required to submit 6-month reports. In addition, all SNAP households must undergo an annual redetermination of eligibility. Each household’s recertification requirements are indicated by date fields in the ACES case file. If a required report or redetermination is not completed by the date indicated in the applicable field, the case’s monthly SNAP benefit is automatically suspended by the system. The Office of the State Auditor (OSA) tested a sample of 20 cases automatically suspended for failure to complete a required review in fiscal year 2024 to verify the accuracy of automated SNAP operations utilizing ACES. In 14 of the 20 cases tested, OSA identified that ACES incorrectly suspended benefits, as follows: • One case was suspended four months after the 6-month reporting requirement, resulting in a known overpayment of $92. • One case was suspended one month after the annual redetermination requirement, resulting in a known overpayment of $535. • Six cases were underpaid SNAP benefits totaling $4,424 because of incorrect benefit suspensions, ranging from one to five months prior to the applicable 6-month reporting requirement. • Five cases were underpaid SNAP benefits totaling $4,206 because of incorrect benefit suspensions, ranging from five to ten months prior to the annual redetermination requirement. • One case was never required to submit 6-month reports or annual redeterminations since commencement of SNAP benefits in July 2022. This resulted in overpayments for the entirety of fiscal year 2024 totaling $3,346. The Department identified the overpayment in July 2024 but has not recouped it yet, thus OSA is questioning costs totaling $3,346. OSA selected a non-statistical random sample. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. 213 clients were automatically suspended by ACES during fiscal year 2024 due to recertification or redetermination requirements. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight • Automated SNAP eligibility system recertification and suspension criteria was not configured in accordance with Federal regulations. Effect: • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations • Benefits may be incorrectly suspended, resulting in households being underpaid or overpaid. Recommendation: We recommend that the Department enhance policies and procedures to ensure that automated SNAP eligibility certification periods and related ACES case file fields are properly configured to process benefits in accordance with Federal regulations. In addition, we recommend that the Department identify underpayments and/or overpayments resulting from recertification period errors and take action as warranted. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with the factual conclusions and calculations. The Department believes the necessary corrective action has been taken and will be reflected in the SFY25 audit. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 24-1108-02)
(2024-025) Title: Internal control over SNAP EBT card security needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for EBT cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of three years. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The program utilizes Electronic Benefit Transfer (EBT) cards as the mechanism to provide benefits. SNAP benefit information is transmitted to the Electronic Payment Processing and Information Control (EPPIC) system used for EBT. An EBT card is issued using the EPPIC system and mailed to the client’s mailing address. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services office for processing. Upon receipt of a returned EBT card, the Automated Client Eligibility System (ACES) is used to verify a client’s personal information, determine what action to take based on case file information, and document the action through electronic case notes. The Department has assigned responsibility for processing returned EBT cards to one employee. This process includes receipt of returned cards, maintenance of inventory control records including supporting documentation in ACES and EPPIC, and destruction or retransmission of the card. Proper segregation of duties does not exist within the current process, as recordkeeping, custody of EBT cards, and authorization of processing activity should be assigned to different employees. In addition, the State is required to maintain accurate and complete inventory records for returned EBT cards. Returned cards are either destroyed or retransmitted, and are tracked using spreadsheets and related documentation through client case notes in ACES and EBT card activity in the EPPIC system. The Office of the State Auditor (OSA) tested a sample of 60 returned EBT cards to verify the accuracy and completeness of the activity recorded on the inventory tracking spreadsheets, and identified: • one returned EBT card where processing activity was not documented in a case note; • one returned EBT card where the disabled card status was not applied in the EPPIC system until nine months after it was destroyed; • one returned EBT card where the action documented in ACES did not match the action taken in the EPPIC system; and • two returned EBT cards were recorded on the tracking spreadsheet as retransmitted to an updated address, but no documentation was maintained in ACES to support that a new address was obtained. OSA selected a non-statistical random sample. A data analysis and cross-match of the inventory tracking spreadsheets identified that one returned EBT card was processed utilizing client information which erroneously included two unrelated client names tied to the same client identification number. Quarterly, management monitors the inventory tracking spreadsheets by selecting a sample of returned EBT cards for review; however, this oversight procedure does not detect and correct processing errors on a timely basis. Furthermore, the State is required to maintain secure storage of, and limited access to, EBT cards. The current process does not require proper physical security over returned EBT cards as the returned cards are placed in an open mailbox during processing. While the mailbox is in a secure area of the facility, any employee working within the regional office has access to this mailbox. Existing policies and procedures in place do not provide adequate security over returned EBT cards, including proper segregation of duties, maintenance of accurate and complete inventory control records, and appropriate physical security controls over EBT cards. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. The Department processed 2,469 returned EBT cards; 853 were recorded as retransmitted and 1,616 were recorded as destroyed. Cause: • Lack of segregation of duties • Lack of adequate policies and procedures relating to the security and oversight of returned EBT cards Effect: • Potential unauthorized use of EBT cards, which may lead to unallowable costs • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to require adequate security and oversight of returned EBT cards, including proper segregation of duties within the process, maintenance of accurate and complete inventory control records, and increased physical security controls. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with this finding. During the audit period, the process for handling returned EBT cards was assigned to one (1) individual. In response to a prior year finding, the Department implemented corrective actions effective July 1, 2024. The current process has the duties separated into 3 roles. First, an Accounting Associate I receives the returned EBT cards at OFI’s Central Office. The Accounting Associate scans the card and envelope to an Office Associate II in a separate office. The Office Associate II enters the cards into a spreadsheet (returned card log) and researches the cases to determine what to do with the card. The Office Associate records the necessary information into the returned card log and makes an ACES case note to reflect any action taken. Then a response is sent back to the Accounting Associate to advise which EBT cards should be shredded and which cards should be resent. Finally, the EBT Manager conducts a periodic review of the returned card log to ensure the cards are being handled appropriately. The Department will also be hiring a new Office Associate II (Supervisor) to assist in this process. Because these procedures were implemented effective 7/1/2024, they were not captured during this single audit. No corrective action is required due to our current procedures meeting state and Federal card security requirements. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 24-1108-01)
(2024-025) Title: Internal control over SNAP EBT card security needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Office for Family Independence Federal Agency: U.S. Department of Agriculture Assistance Listing Title: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Special tests and provisions Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 7 CFR 274.5 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The State is required to provide the following minimum security and control procedures for EBT cards: secure storage; access limited to authorized personnel; inventory control records; and a periodic review and validation of inventory controls and records by parties not otherwise involved in maintaining control records. Issuance, inventory, reconciliation, and other accountability records must be maintained for a period of three years. Condition: The Supplemental Nutrition Assistance Program (SNAP) provides monthly benefits to eligible households to purchase nutritious foods. The program utilizes Electronic Benefit Transfer (EBT) cards as the mechanism to provide benefits. SNAP benefit information is transmitted to the Electronic Payment Processing and Information Control (EPPIC) system used for EBT. An EBT card is issued using the EPPIC system and mailed to the client’s mailing address. EBT cards that are undeliverable are returned to the regional Department of Health and Human Services office for processing. Upon receipt of a returned EBT card, the Automated Client Eligibility System (ACES) is used to verify a client’s personal information, determine what action to take based on case file information, and document the action through electronic case notes. The Department has assigned responsibility for processing returned EBT cards to one employee. This process includes receipt of returned cards, maintenance of inventory control records including supporting documentation in ACES and EPPIC, and destruction or retransmission of the card. Proper segregation of duties does not exist within the current process, as recordkeeping, custody of EBT cards, and authorization of processing activity should be assigned to different employees. In addition, the State is required to maintain accurate and complete inventory records for returned EBT cards. Returned cards are either destroyed or retransmitted, and are tracked using spreadsheets and related documentation through client case notes in ACES and EBT card activity in the EPPIC system. The Office of the State Auditor (OSA) tested a sample of 60 returned EBT cards to verify the accuracy and completeness of the activity recorded on the inventory tracking spreadsheets, and identified: • one returned EBT card where processing activity was not documented in a case note; • one returned EBT card where the disabled card status was not applied in the EPPIC system until nine months after it was destroyed; • one returned EBT card where the action documented in ACES did not match the action taken in the EPPIC system; and • two returned EBT cards were recorded on the tracking spreadsheet as retransmitted to an updated address, but no documentation was maintained in ACES to support that a new address was obtained. OSA selected a non-statistical random sample. A data analysis and cross-match of the inventory tracking spreadsheets identified that one returned EBT card was processed utilizing client information which erroneously included two unrelated client names tied to the same client identification number. Quarterly, management monitors the inventory tracking spreadsheets by selecting a sample of returned EBT cards for review; however, this oversight procedure does not detect and correct processing errors on a timely basis. Furthermore, the State is required to maintain secure storage of, and limited access to, EBT cards. The current process does not require proper physical security over returned EBT cards as the returned cards are placed in an open mailbox during processing. While the mailbox is in a secure area of the facility, any employee working within the regional office has access to this mailbox. Existing policies and procedures in place do not provide adequate security over returned EBT cards, including proper segregation of duties, maintenance of accurate and complete inventory control records, and appropriate physical security controls over EBT cards. Context: In fiscal year 2024, the State provided approximately 129,000 SNAP clients with $371.4 million in Federal benefits. The Department processed 2,469 returned EBT cards; 853 were recorded as retransmitted and 1,616 were recorded as destroyed. Cause: • Lack of segregation of duties • Lack of adequate policies and procedures relating to the security and oversight of returned EBT cards Effect: • Potential unauthorized use of EBT cards, which may lead to unallowable costs • Noncompliance with Federal regulations Recommendation: We recommend that the Department enhance policies and procedures to require adequate security and oversight of returned EBT cards, including proper segregation of duties within the process, maintenance of accurate and complete inventory control records, and increased physical security controls. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with this finding. During the audit period, the process for handling returned EBT cards was assigned to one (1) individual. In response to a prior year finding, the Department implemented corrective actions effective July 1, 2024. The current process has the duties separated into 3 roles. First, an Accounting Associate I receives the returned EBT cards at OFI’s Central Office. The Accounting Associate scans the card and envelope to an Office Associate II in a separate office. The Office Associate II enters the cards into a spreadsheet (returned card log) and researches the cases to determine what to do with the card. The Office Associate records the necessary information into the returned card log and makes an ACES case note to reflect any action taken. Then a response is sent back to the Accounting Associate to advise which EBT cards should be shredded and which cards should be resent. Finally, the EBT Manager conducts a periodic review of the returned card log to ensure the cards are being handled appropriately. The Department will also be hiring a new Office Associate II (Supervisor) to assist in this process. Because these procedures were implemented effective 7/1/2024, they were not captured during this single audit. No corrective action is required due to our current procedures meeting state and Federal card security requirements. Contact: Ian Yaffe, Director, Office for Family Independence, DHHS, 207-592-1481 (State Number: 24-1108-01)
(2024-026) Title: Internal control over DHHS special reporting needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Opioid STR Assistance Listing Number: 10.551, 10.561; 10.557; 93.788 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into FSRS. The Office of the State Auditor (OSA) tested nine first-tier subawards totaling $1,515,620 that exceeded the first-tier subaward threshold. Federal regulations require the following information for identified noncompliance to be included in FFATA findings: • three WIC subawards totaling approximately $746,000 were not reported and thus, not reported timely; • one Supplemental Nutrition Assistance Program (SNAP) subaward totaling approximately $95,000 was not reported and thus, not reported timely; • one Opioid State Targeted Response (STR) subaward totaling approximately $68,000 was not reported and thus, not reported timely; • no subaward amounts were reported incorrectly; and • no subawards reported incorrect key data elements. The unreported Opioid STR subaward was a contract modification that included multiple sources of grant funds including the Temporary Assistance for Needy Families program. Upon OSA’s inquiry, the Department stated that the Opioid STR subaward was not reported because the Federal Award Identification Number (FAIN) was missing. The Department provided a verification workbook that serves as a working log for subawards that may require FFATA reporting but have not been reported in FSRS for various reasons. Review of the log revealed additional grant programs, including WIC and SNAP, with unreported subawards due to missing FAINs. OSA was able to locate the missing FAINs by contacting the grant program administrators listed on the encumbered contract. OSA selected a non-statistical random sample. Context: During fiscal year 2024, the Department disbursed: • $5.9 million to subrecipients from WIC grant funds of $22.8 million. • $5.2 million to subrecipients from SNAP administrative grant funds of $19.1 million. • $4.9 million to subrecipients from Opioid STR grant funds of $5.9 million. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Noncompliance with Federal regulations • Accurate first-tier subaward information for the WIC, SNAP, and Opioid STR programs was not reported to the Federal government. This information may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department enhance policies and oversight procedures to ensure that all first-tier subawards are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with this finding. The Division of Contract Management has developed and will implement a corrective action plan to address the issues identified. Contact: Jeanne Garza, Deputy Director, Division of Contract Management, DHHS, 207-287-1848 (State Number: 24-1100-02)
(2024-026) Title: Internal control over DHHS special reporting needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Opioid STR Assistance Listing Number: 10.551, 10.561; 10.557; 93.788 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into FSRS. The Office of the State Auditor (OSA) tested nine first-tier subawards totaling $1,515,620 that exceeded the first-tier subaward threshold. Federal regulations require the following information for identified noncompliance to be included in FFATA findings: • three WIC subawards totaling approximately $746,000 were not reported and thus, not reported timely; • one Supplemental Nutrition Assistance Program (SNAP) subaward totaling approximately $95,000 was not reported and thus, not reported timely; • one Opioid State Targeted Response (STR) subaward totaling approximately $68,000 was not reported and thus, not reported timely; • no subaward amounts were reported incorrectly; and • no subawards reported incorrect key data elements. The unreported Opioid STR subaward was a contract modification that included multiple sources of grant funds including the Temporary Assistance for Needy Families program. Upon OSA’s inquiry, the Department stated that the Opioid STR subaward was not reported because the Federal Award Identification Number (FAIN) was missing. The Department provided a verification workbook that serves as a working log for subawards that may require FFATA reporting but have not been reported in FSRS for various reasons. Review of the log revealed additional grant programs, including WIC and SNAP, with unreported subawards due to missing FAINs. OSA was able to locate the missing FAINs by contacting the grant program administrators listed on the encumbered contract. OSA selected a non-statistical random sample. Context: During fiscal year 2024, the Department disbursed: • $5.9 million to subrecipients from WIC grant funds of $22.8 million. • $5.2 million to subrecipients from SNAP administrative grant funds of $19.1 million. • $4.9 million to subrecipients from Opioid STR grant funds of $5.9 million. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Noncompliance with Federal regulations • Accurate first-tier subaward information for the WIC, SNAP, and Opioid STR programs was not reported to the Federal government. This information may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department enhance policies and oversight procedures to ensure that all first-tier subawards are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with this finding. The Division of Contract Management has developed and will implement a corrective action plan to address the issues identified. Contact: Jeanne Garza, Deputy Director, Division of Contract Management, DHHS, 207-287-1848 (State Number: 24-1100-02)
(2024-026) Title: Internal control over DHHS special reporting needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Opioid STR Assistance Listing Number: 10.551, 10.561; 10.557; 93.788 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into FSRS. The Office of the State Auditor (OSA) tested nine first-tier subawards totaling $1,515,620 that exceeded the first-tier subaward threshold. Federal regulations require the following information for identified noncompliance to be included in FFATA findings: • three WIC subawards totaling approximately $746,000 were not reported and thus, not reported timely; • one Supplemental Nutrition Assistance Program (SNAP) subaward totaling approximately $95,000 was not reported and thus, not reported timely; • one Opioid State Targeted Response (STR) subaward totaling approximately $68,000 was not reported and thus, not reported timely; • no subaward amounts were reported incorrectly; and • no subawards reported incorrect key data elements. The unreported Opioid STR subaward was a contract modification that included multiple sources of grant funds including the Temporary Assistance for Needy Families program. Upon OSA’s inquiry, the Department stated that the Opioid STR subaward was not reported because the Federal Award Identification Number (FAIN) was missing. The Department provided a verification workbook that serves as a working log for subawards that may require FFATA reporting but have not been reported in FSRS for various reasons. Review of the log revealed additional grant programs, including WIC and SNAP, with unreported subawards due to missing FAINs. OSA was able to locate the missing FAINs by contacting the grant program administrators listed on the encumbered contract. OSA selected a non-statistical random sample. Context: During fiscal year 2024, the Department disbursed: • $5.9 million to subrecipients from WIC grant funds of $22.8 million. • $5.2 million to subrecipients from SNAP administrative grant funds of $19.1 million. • $4.9 million to subrecipients from Opioid STR grant funds of $5.9 million. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Noncompliance with Federal regulations • Accurate first-tier subaward information for the WIC, SNAP, and Opioid STR programs was not reported to the Federal government. This information may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department enhance policies and oversight procedures to ensure that all first-tier subawards are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with this finding. The Division of Contract Management has developed and will implement a corrective action plan to address the issues identified. Contact: Jeanne Garza, Deputy Director, Division of Contract Management, DHHS, 207-287-1848 (State Number: 24-1100-02)
(2024-026) Title: Internal control over DHHS special reporting needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Opioid STR Assistance Listing Number: 10.551, 10.561; 10.557; 93.788 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into FSRS. The Office of the State Auditor (OSA) tested nine first-tier subawards totaling $1,515,620 that exceeded the first-tier subaward threshold. Federal regulations require the following information for identified noncompliance to be included in FFATA findings: • three WIC subawards totaling approximately $746,000 were not reported and thus, not reported timely; • one Supplemental Nutrition Assistance Program (SNAP) subaward totaling approximately $95,000 was not reported and thus, not reported timely; • one Opioid State Targeted Response (STR) subaward totaling approximately $68,000 was not reported and thus, not reported timely; • no subaward amounts were reported incorrectly; and • no subawards reported incorrect key data elements. The unreported Opioid STR subaward was a contract modification that included multiple sources of grant funds including the Temporary Assistance for Needy Families program. Upon OSA’s inquiry, the Department stated that the Opioid STR subaward was not reported because the Federal Award Identification Number (FAIN) was missing. The Department provided a verification workbook that serves as a working log for subawards that may require FFATA reporting but have not been reported in FSRS for various reasons. Review of the log revealed additional grant programs, including WIC and SNAP, with unreported subawards due to missing FAINs. OSA was able to locate the missing FAINs by contacting the grant program administrators listed on the encumbered contract. OSA selected a non-statistical random sample. Context: During fiscal year 2024, the Department disbursed: • $5.9 million to subrecipients from WIC grant funds of $22.8 million. • $5.2 million to subrecipients from SNAP administrative grant funds of $19.1 million. • $4.9 million to subrecipients from Opioid STR grant funds of $5.9 million. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Noncompliance with Federal regulations • Accurate first-tier subaward information for the WIC, SNAP, and Opioid STR programs was not reported to the Federal government. This information may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department enhance policies and oversight procedures to ensure that all first-tier subawards are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with this finding. The Division of Contract Management has developed and will implement a corrective action plan to address the issues identified. Contact: Jeanne Garza, Deputy Director, Division of Contract Management, DHHS, 207-287-1848 (State Number: 24-1100-02)
(2024-026) Title: Internal control over DHHS special reporting needs improvement Prior Year Findings: None State Department: Health and Human Services State Bureau: Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: SNAP Cluster Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Opioid STR Assistance Listing Number: 10.551, 10.561; 10.557; 93.788 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Reporting Type of Finding: Significant deficiency Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 170 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. Agencies must report each subaward that equals or exceeds the first-tier subaward threshold of $30,000 in Federal funds in the public-facing Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Condition: When an amount exceeding the first-tier subaward threshold is awarded to a subrecipient, the Department must collect and enter data into FSRS. The Office of the State Auditor (OSA) tested nine first-tier subawards totaling $1,515,620 that exceeded the first-tier subaward threshold. Federal regulations require the following information for identified noncompliance to be included in FFATA findings: • three WIC subawards totaling approximately $746,000 were not reported and thus, not reported timely; • one Supplemental Nutrition Assistance Program (SNAP) subaward totaling approximately $95,000 was not reported and thus, not reported timely; • one Opioid State Targeted Response (STR) subaward totaling approximately $68,000 was not reported and thus, not reported timely; • no subaward amounts were reported incorrectly; and • no subawards reported incorrect key data elements. The unreported Opioid STR subaward was a contract modification that included multiple sources of grant funds including the Temporary Assistance for Needy Families program. Upon OSA’s inquiry, the Department stated that the Opioid STR subaward was not reported because the Federal Award Identification Number (FAIN) was missing. The Department provided a verification workbook that serves as a working log for subawards that may require FFATA reporting but have not been reported in FSRS for various reasons. Review of the log revealed additional grant programs, including WIC and SNAP, with unreported subawards due to missing FAINs. OSA was able to locate the missing FAINs by contacting the grant program administrators listed on the encumbered contract. OSA selected a non-statistical random sample. Context: During fiscal year 2024, the Department disbursed: • $5.9 million to subrecipients from WIC grant funds of $22.8 million. • $5.2 million to subrecipients from SNAP administrative grant funds of $19.1 million. • $4.9 million to subrecipients from Opioid STR grant funds of $5.9 million. Cause: • Lack of supervisory oversight • Lack of adequate policies and procedures Effect: • Noncompliance with Federal regulations • Accurate first-tier subaward information for the WIC, SNAP, and Opioid STR programs was not reported to the Federal government. This information may be used for programmatic, policy or statistical purposes. Recommendation: We recommend that the Department enhance policies and oversight procedures to ensure that all first-tier subawards are reported accurately, timely, and in accordance with Federal regulations. Corrective Action Plan: See F-14 Management’s Response: The Department agrees with this finding. The Division of Contract Management has developed and will implement a corrective action plan to address the issues identified. Contact: Jeanne Garza, Deputy Director, Division of Contract Management, DHHS, 207-287-1848 (State Number: 24-1100-02)
(2024-030) Title: Internal control over CNC eligibility needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.559 $628,924 Likely Questioned Costs: Undeterminable; there is insufficient information on the application to identify programs that may be operating under an incorrect classification. Criteria: 2 CFR 200.303; 7 CFR 210.7 and .9; 7 CFR 225.6, .14, and .16; 7 CFR 245.12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 7 CFR 210 outlines the application requirements for participation in the National School Lunch Program (NSLP), and specifies that applications shall provide the State agency with sufficient information to determine eligibility. 7 CFR 225 requirements include: • the type of information that must be required in sponsor applications for participation; • sites that serve an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet the program's income standards; • the proposed site is not or will not be served in whole or in part by another site; • State agency requirements related to the approval of applications and determinations of eligibility; and • the process and requirements for claims for reimbursement (CFRs). 7 CFR 245 describes the action taken by State agencies related to the eligibility determination of individuals and special eligibility determinations of schools including Provision II and Community Eligible Provision (CEP) schools. These regulations outline how the School Food Authority (SFA) and State agency should collect and report eligibility information in the schools, and how that information should be used in establishing rates and percentages in CFRs. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, Summer Food Service Program (SFSP) and the Fresh Fruit and Vegetable Program. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit applications for participation in CNC programs and DOE is required to review every application and site information sheet to ensure that only eligible SFAs or sponsors participate in the programs. The Office of the State Auditor (OSA) tested 48 applications and found instances that did not align with program regulations for NSLP and SFSP, as follows: National School Lunch Program Applications to participate in child nutrition programs must include attestations and written agreement to the regulations set forth in 7 CFR 210 and 7 CFR 245. Agreements must be signed and returned to Child Nutrition Services (CNS) prior to meal service and the submission of a CFR by the SFA. OSA tested 32 applications from SFAs and sponsors for participation in NSLP and identified six applications that were not complete or were approved prior to participation in the program, as follows: • Three applications were approved for participation with missing information, including: o one application missing an agreement for participation in CEP; o one application not indicating the year of operation; and o one application missing the signature of the SFA superintendent. • Two applications were submitted after participation in the program had begun. • One application was missing the meal pattern agreement attestation that made them eligible for the eight-cent performance-based reimbursement for every lunch served and was also submitted after participation in the program had begun. OSA selected a non-statistical random sample. Summer Food Service Program While SFAs may operate SFSP, residential and non-residential day camps, units of local, municipal, county or State governments, and private nonprofit organizations may also participate in the program; these providers are called sponsors. Sponsors must submit a written application to CNS by June 15 to participate in the program. Sponsors operate individual sites, and sponsor applications must include site sheets for each site. OSA tested 16 applications from sponsors for participation in SFSP and found: • four applications were revised and the revisions were erroneously applied to prior months, resulting in questioned costs totaling $1,767 for meals served prior to approved revisions; and • eleven applications, including two with more than one error, that were approved with sites that did not meet the eligibility criteria, as follows: o Four sponsors had sites where CNS incorrectly categorized non-residential day camps as open sites, which allowed the site to use the area eligibility determination instead of using individual eligibility determinations, resulting in questioned costs totaling $68,342 for meals served without eligibility information provided. o Two sponsors of camps did not provide the number of eligible children for each session at their sites prior to submitting a CFR, resulting in questioned costs totaling $63,493 for meals served without eligibility information provided. o Three sponsors had four sites that used incorrect school or census data to demonstrate eligibility, resulting in one site that was ineligible for participation, and questioned costs totaling $33,682 for the operation of an ineligible site. o One application was approved with a breakfast time of 11:30 a.m.; there was no documentation to support that this meal was served near the site’s opening time as required by regulations, resulting in questioned costs totaling $8,635 for meals that do meet meal time requirements. o Three applications were approved for non-congregate sites that did not include procedures to ensure duplicate meals would not be distributed. One sponsor had seven open sites with overlapping meal times within a quarter-mile radius. OSA selected a non-statistical random sample. In addition, OSA performed analytical procedures over SFSP site classifications and found: • 58 sites from 32 sponsors did not apply eligibility criteria for camp participation, as follows: o 29 sites were classified as open sites or closed enrolled sites when additional information on the application or publicly available information indicated that the program met the definition of camps provided at 7 CFR 225; these sites used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $208,142. o 9 sites indicated they were camps; however, they were classified as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $100,379. o 13 sites indicated they were camps; however, their applications were not revised to include actual eligibility counts for each session prior to submission of CFRs, resulting in questioned costs totaling $82,567. o 7 sites described camp activities in their description of operations, but classified themselves as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible campers, resulting in questioned costs totaling $48,224. • 16 sponsors had site revisions approved by CNS that added operating days, increased capacities, changed meal types, added meals, or added non-congregate operations to a prior month. CNS permitted sponsors to include those revisions in the prior month’s CFR which were not in accordance with the agreement in place at the time of service, resulting in questioned costs totaling $13,693. Context: CNS processed $55.8 million in CFRs for NSLP, and $2.8 million in CFRs for SFSP in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • CNC participation by ineligible SFAs or sponsors • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that CNS revise policies and procedures to ensure: • SFSP site information sheet revisions prohibit the sponsor from using the revised information in a claim for a prior month; • site classifications appropriately identify camps, consistent with Federal regulations; and • site information sheets contain non-congregate plans that include required information. Additionally, we recommend that CNS enhance oversight to ensure: • all required documents for applications are complete and signed prior to meal service; • session-specific eligibility information is available on the site information sheets for camps; and • the eligibility of the locations of non-congregate sites is properly supported. Corrective Action Plan: See F-15 Management’s Response: The Department agrees with this finding. Procedures for “Application Approvals” will be delineated regarding application and claim revisions, Site classification, non-congregate plan requirements, Eligibility criteria and back up documentation, and all requirement documents will be adequately reviewed. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-05)
(2024-030) Title: Internal control over CNC eligibility needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.559 $628,924 Likely Questioned Costs: Undeterminable; there is insufficient information on the application to identify programs that may be operating under an incorrect classification. Criteria: 2 CFR 200.303; 7 CFR 210.7 and .9; 7 CFR 225.6, .14, and .16; 7 CFR 245.12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 7 CFR 210 outlines the application requirements for participation in the National School Lunch Program (NSLP), and specifies that applications shall provide the State agency with sufficient information to determine eligibility. 7 CFR 225 requirements include: • the type of information that must be required in sponsor applications for participation; • sites that serve an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet the program's income standards; • the proposed site is not or will not be served in whole or in part by another site; • State agency requirements related to the approval of applications and determinations of eligibility; and • the process and requirements for claims for reimbursement (CFRs). 7 CFR 245 describes the action taken by State agencies related to the eligibility determination of individuals and special eligibility determinations of schools including Provision II and Community Eligible Provision (CEP) schools. These regulations outline how the School Food Authority (SFA) and State agency should collect and report eligibility information in the schools, and how that information should be used in establishing rates and percentages in CFRs. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, Summer Food Service Program (SFSP) and the Fresh Fruit and Vegetable Program. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit applications for participation in CNC programs and DOE is required to review every application and site information sheet to ensure that only eligible SFAs or sponsors participate in the programs. The Office of the State Auditor (OSA) tested 48 applications and found instances that did not align with program regulations for NSLP and SFSP, as follows: National School Lunch Program Applications to participate in child nutrition programs must include attestations and written agreement to the regulations set forth in 7 CFR 210 and 7 CFR 245. Agreements must be signed and returned to Child Nutrition Services (CNS) prior to meal service and the submission of a CFR by the SFA. OSA tested 32 applications from SFAs and sponsors for participation in NSLP and identified six applications that were not complete or were approved prior to participation in the program, as follows: • Three applications were approved for participation with missing information, including: o one application missing an agreement for participation in CEP; o one application not indicating the year of operation; and o one application missing the signature of the SFA superintendent. • Two applications were submitted after participation in the program had begun. • One application was missing the meal pattern agreement attestation that made them eligible for the eight-cent performance-based reimbursement for every lunch served and was also submitted after participation in the program had begun. OSA selected a non-statistical random sample. Summer Food Service Program While SFAs may operate SFSP, residential and non-residential day camps, units of local, municipal, county or State governments, and private nonprofit organizations may also participate in the program; these providers are called sponsors. Sponsors must submit a written application to CNS by June 15 to participate in the program. Sponsors operate individual sites, and sponsor applications must include site sheets for each site. OSA tested 16 applications from sponsors for participation in SFSP and found: • four applications were revised and the revisions were erroneously applied to prior months, resulting in questioned costs totaling $1,767 for meals served prior to approved revisions; and • eleven applications, including two with more than one error, that were approved with sites that did not meet the eligibility criteria, as follows: o Four sponsors had sites where CNS incorrectly categorized non-residential day camps as open sites, which allowed the site to use the area eligibility determination instead of using individual eligibility determinations, resulting in questioned costs totaling $68,342 for meals served without eligibility information provided. o Two sponsors of camps did not provide the number of eligible children for each session at their sites prior to submitting a CFR, resulting in questioned costs totaling $63,493 for meals served without eligibility information provided. o Three sponsors had four sites that used incorrect school or census data to demonstrate eligibility, resulting in one site that was ineligible for participation, and questioned costs totaling $33,682 for the operation of an ineligible site. o One application was approved with a breakfast time of 11:30 a.m.; there was no documentation to support that this meal was served near the site’s opening time as required by regulations, resulting in questioned costs totaling $8,635 for meals that do meet meal time requirements. o Three applications were approved for non-congregate sites that did not include procedures to ensure duplicate meals would not be distributed. One sponsor had seven open sites with overlapping meal times within a quarter-mile radius. OSA selected a non-statistical random sample. In addition, OSA performed analytical procedures over SFSP site classifications and found: • 58 sites from 32 sponsors did not apply eligibility criteria for camp participation, as follows: o 29 sites were classified as open sites or closed enrolled sites when additional information on the application or publicly available information indicated that the program met the definition of camps provided at 7 CFR 225; these sites used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $208,142. o 9 sites indicated they were camps; however, they were classified as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $100,379. o 13 sites indicated they were camps; however, their applications were not revised to include actual eligibility counts for each session prior to submission of CFRs, resulting in questioned costs totaling $82,567. o 7 sites described camp activities in their description of operations, but classified themselves as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible campers, resulting in questioned costs totaling $48,224. • 16 sponsors had site revisions approved by CNS that added operating days, increased capacities, changed meal types, added meals, or added non-congregate operations to a prior month. CNS permitted sponsors to include those revisions in the prior month’s CFR which were not in accordance with the agreement in place at the time of service, resulting in questioned costs totaling $13,693. Context: CNS processed $55.8 million in CFRs for NSLP, and $2.8 million in CFRs for SFSP in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • CNC participation by ineligible SFAs or sponsors • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that CNS revise policies and procedures to ensure: • SFSP site information sheet revisions prohibit the sponsor from using the revised information in a claim for a prior month; • site classifications appropriately identify camps, consistent with Federal regulations; and • site information sheets contain non-congregate plans that include required information. Additionally, we recommend that CNS enhance oversight to ensure: • all required documents for applications are complete and signed prior to meal service; • session-specific eligibility information is available on the site information sheets for camps; and • the eligibility of the locations of non-congregate sites is properly supported. Corrective Action Plan: See F-15 Management’s Response: The Department agrees with this finding. Procedures for “Application Approvals” will be delineated regarding application and claim revisions, Site classification, non-congregate plan requirements, Eligibility criteria and back up documentation, and all requirement documents will be adequately reviewed. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-05)
(2024-030) Title: Internal control over CNC eligibility needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.559 $628,924 Likely Questioned Costs: Undeterminable; there is insufficient information on the application to identify programs that may be operating under an incorrect classification. Criteria: 2 CFR 200.303; 7 CFR 210.7 and .9; 7 CFR 225.6, .14, and .16; 7 CFR 245.12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 7 CFR 210 outlines the application requirements for participation in the National School Lunch Program (NSLP), and specifies that applications shall provide the State agency with sufficient information to determine eligibility. 7 CFR 225 requirements include: • the type of information that must be required in sponsor applications for participation; • sites that serve an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet the program's income standards; • the proposed site is not or will not be served in whole or in part by another site; • State agency requirements related to the approval of applications and determinations of eligibility; and • the process and requirements for claims for reimbursement (CFRs). 7 CFR 245 describes the action taken by State agencies related to the eligibility determination of individuals and special eligibility determinations of schools including Provision II and Community Eligible Provision (CEP) schools. These regulations outline how the School Food Authority (SFA) and State agency should collect and report eligibility information in the schools, and how that information should be used in establishing rates and percentages in CFRs. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, Summer Food Service Program (SFSP) and the Fresh Fruit and Vegetable Program. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit applications for participation in CNC programs and DOE is required to review every application and site information sheet to ensure that only eligible SFAs or sponsors participate in the programs. The Office of the State Auditor (OSA) tested 48 applications and found instances that did not align with program regulations for NSLP and SFSP, as follows: National School Lunch Program Applications to participate in child nutrition programs must include attestations and written agreement to the regulations set forth in 7 CFR 210 and 7 CFR 245. Agreements must be signed and returned to Child Nutrition Services (CNS) prior to meal service and the submission of a CFR by the SFA. OSA tested 32 applications from SFAs and sponsors for participation in NSLP and identified six applications that were not complete or were approved prior to participation in the program, as follows: • Three applications were approved for participation with missing information, including: o one application missing an agreement for participation in CEP; o one application not indicating the year of operation; and o one application missing the signature of the SFA superintendent. • Two applications were submitted after participation in the program had begun. • One application was missing the meal pattern agreement attestation that made them eligible for the eight-cent performance-based reimbursement for every lunch served and was also submitted after participation in the program had begun. OSA selected a non-statistical random sample. Summer Food Service Program While SFAs may operate SFSP, residential and non-residential day camps, units of local, municipal, county or State governments, and private nonprofit organizations may also participate in the program; these providers are called sponsors. Sponsors must submit a written application to CNS by June 15 to participate in the program. Sponsors operate individual sites, and sponsor applications must include site sheets for each site. OSA tested 16 applications from sponsors for participation in SFSP and found: • four applications were revised and the revisions were erroneously applied to prior months, resulting in questioned costs totaling $1,767 for meals served prior to approved revisions; and • eleven applications, including two with more than one error, that were approved with sites that did not meet the eligibility criteria, as follows: o Four sponsors had sites where CNS incorrectly categorized non-residential day camps as open sites, which allowed the site to use the area eligibility determination instead of using individual eligibility determinations, resulting in questioned costs totaling $68,342 for meals served without eligibility information provided. o Two sponsors of camps did not provide the number of eligible children for each session at their sites prior to submitting a CFR, resulting in questioned costs totaling $63,493 for meals served without eligibility information provided. o Three sponsors had four sites that used incorrect school or census data to demonstrate eligibility, resulting in one site that was ineligible for participation, and questioned costs totaling $33,682 for the operation of an ineligible site. o One application was approved with a breakfast time of 11:30 a.m.; there was no documentation to support that this meal was served near the site’s opening time as required by regulations, resulting in questioned costs totaling $8,635 for meals that do meet meal time requirements. o Three applications were approved for non-congregate sites that did not include procedures to ensure duplicate meals would not be distributed. One sponsor had seven open sites with overlapping meal times within a quarter-mile radius. OSA selected a non-statistical random sample. In addition, OSA performed analytical procedures over SFSP site classifications and found: • 58 sites from 32 sponsors did not apply eligibility criteria for camp participation, as follows: o 29 sites were classified as open sites or closed enrolled sites when additional information on the application or publicly available information indicated that the program met the definition of camps provided at 7 CFR 225; these sites used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $208,142. o 9 sites indicated they were camps; however, they were classified as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $100,379. o 13 sites indicated they were camps; however, their applications were not revised to include actual eligibility counts for each session prior to submission of CFRs, resulting in questioned costs totaling $82,567. o 7 sites described camp activities in their description of operations, but classified themselves as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible campers, resulting in questioned costs totaling $48,224. • 16 sponsors had site revisions approved by CNS that added operating days, increased capacities, changed meal types, added meals, or added non-congregate operations to a prior month. CNS permitted sponsors to include those revisions in the prior month’s CFR which were not in accordance with the agreement in place at the time of service, resulting in questioned costs totaling $13,693. Context: CNS processed $55.8 million in CFRs for NSLP, and $2.8 million in CFRs for SFSP in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • CNC participation by ineligible SFAs or sponsors • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that CNS revise policies and procedures to ensure: • SFSP site information sheet revisions prohibit the sponsor from using the revised information in a claim for a prior month; • site classifications appropriately identify camps, consistent with Federal regulations; and • site information sheets contain non-congregate plans that include required information. Additionally, we recommend that CNS enhance oversight to ensure: • all required documents for applications are complete and signed prior to meal service; • session-specific eligibility information is available on the site information sheets for camps; and • the eligibility of the locations of non-congregate sites is properly supported. Corrective Action Plan: See F-15 Management’s Response: The Department agrees with this finding. Procedures for “Application Approvals” will be delineated regarding application and claim revisions, Site classification, non-congregate plan requirements, Eligibility criteria and back up documentation, and all requirement documents will be adequately reviewed. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-05)
(2024-030) Title: Internal control over CNC eligibility needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.559 $628,924 Likely Questioned Costs: Undeterminable; there is insufficient information on the application to identify programs that may be operating under an incorrect classification. Criteria: 2 CFR 200.303; 7 CFR 210.7 and .9; 7 CFR 225.6, .14, and .16; 7 CFR 245.12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 7 CFR 210 outlines the application requirements for participation in the National School Lunch Program (NSLP), and specifies that applications shall provide the State agency with sufficient information to determine eligibility. 7 CFR 225 requirements include: • the type of information that must be required in sponsor applications for participation; • sites that serve an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet the program's income standards; • the proposed site is not or will not be served in whole or in part by another site; • State agency requirements related to the approval of applications and determinations of eligibility; and • the process and requirements for claims for reimbursement (CFRs). 7 CFR 245 describes the action taken by State agencies related to the eligibility determination of individuals and special eligibility determinations of schools including Provision II and Community Eligible Provision (CEP) schools. These regulations outline how the School Food Authority (SFA) and State agency should collect and report eligibility information in the schools, and how that information should be used in establishing rates and percentages in CFRs. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, Summer Food Service Program (SFSP) and the Fresh Fruit and Vegetable Program. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit applications for participation in CNC programs and DOE is required to review every application and site information sheet to ensure that only eligible SFAs or sponsors participate in the programs. The Office of the State Auditor (OSA) tested 48 applications and found instances that did not align with program regulations for NSLP and SFSP, as follows: National School Lunch Program Applications to participate in child nutrition programs must include attestations and written agreement to the regulations set forth in 7 CFR 210 and 7 CFR 245. Agreements must be signed and returned to Child Nutrition Services (CNS) prior to meal service and the submission of a CFR by the SFA. OSA tested 32 applications from SFAs and sponsors for participation in NSLP and identified six applications that were not complete or were approved prior to participation in the program, as follows: • Three applications were approved for participation with missing information, including: o one application missing an agreement for participation in CEP; o one application not indicating the year of operation; and o one application missing the signature of the SFA superintendent. • Two applications were submitted after participation in the program had begun. • One application was missing the meal pattern agreement attestation that made them eligible for the eight-cent performance-based reimbursement for every lunch served and was also submitted after participation in the program had begun. OSA selected a non-statistical random sample. Summer Food Service Program While SFAs may operate SFSP, residential and non-residential day camps, units of local, municipal, county or State governments, and private nonprofit organizations may also participate in the program; these providers are called sponsors. Sponsors must submit a written application to CNS by June 15 to participate in the program. Sponsors operate individual sites, and sponsor applications must include site sheets for each site. OSA tested 16 applications from sponsors for participation in SFSP and found: • four applications were revised and the revisions were erroneously applied to prior months, resulting in questioned costs totaling $1,767 for meals served prior to approved revisions; and • eleven applications, including two with more than one error, that were approved with sites that did not meet the eligibility criteria, as follows: o Four sponsors had sites where CNS incorrectly categorized non-residential day camps as open sites, which allowed the site to use the area eligibility determination instead of using individual eligibility determinations, resulting in questioned costs totaling $68,342 for meals served without eligibility information provided. o Two sponsors of camps did not provide the number of eligible children for each session at their sites prior to submitting a CFR, resulting in questioned costs totaling $63,493 for meals served without eligibility information provided. o Three sponsors had four sites that used incorrect school or census data to demonstrate eligibility, resulting in one site that was ineligible for participation, and questioned costs totaling $33,682 for the operation of an ineligible site. o One application was approved with a breakfast time of 11:30 a.m.; there was no documentation to support that this meal was served near the site’s opening time as required by regulations, resulting in questioned costs totaling $8,635 for meals that do meet meal time requirements. o Three applications were approved for non-congregate sites that did not include procedures to ensure duplicate meals would not be distributed. One sponsor had seven open sites with overlapping meal times within a quarter-mile radius. OSA selected a non-statistical random sample. In addition, OSA performed analytical procedures over SFSP site classifications and found: • 58 sites from 32 sponsors did not apply eligibility criteria for camp participation, as follows: o 29 sites were classified as open sites or closed enrolled sites when additional information on the application or publicly available information indicated that the program met the definition of camps provided at 7 CFR 225; these sites used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $208,142. o 9 sites indicated they were camps; however, they were classified as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $100,379. o 13 sites indicated they were camps; however, their applications were not revised to include actual eligibility counts for each session prior to submission of CFRs, resulting in questioned costs totaling $82,567. o 7 sites described camp activities in their description of operations, but classified themselves as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible campers, resulting in questioned costs totaling $48,224. • 16 sponsors had site revisions approved by CNS that added operating days, increased capacities, changed meal types, added meals, or added non-congregate operations to a prior month. CNS permitted sponsors to include those revisions in the prior month’s CFR which were not in accordance with the agreement in place at the time of service, resulting in questioned costs totaling $13,693. Context: CNS processed $55.8 million in CFRs for NSLP, and $2.8 million in CFRs for SFSP in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • CNC participation by ineligible SFAs or sponsors • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that CNS revise policies and procedures to ensure: • SFSP site information sheet revisions prohibit the sponsor from using the revised information in a claim for a prior month; • site classifications appropriately identify camps, consistent with Federal regulations; and • site information sheets contain non-congregate plans that include required information. Additionally, we recommend that CNS enhance oversight to ensure: • all required documents for applications are complete and signed prior to meal service; • session-specific eligibility information is available on the site information sheets for camps; and • the eligibility of the locations of non-congregate sites is properly supported. Corrective Action Plan: See F-15 Management’s Response: The Department agrees with this finding. Procedures for “Application Approvals” will be delineated regarding application and claim revisions, Site classification, non-congregate plan requirements, Eligibility criteria and back up documentation, and all requirement documents will be adequately reviewed. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-05)
(2024-030) Title: Internal control over CNC eligibility needs improvement Prior Year Findings: None State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Eligibility Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.559 $628,924 Likely Questioned Costs: Undeterminable; there is insufficient information on the application to identify programs that may be operating under an incorrect classification. Criteria: 2 CFR 200.303; 7 CFR 210.7 and .9; 7 CFR 225.6, .14, and .16; 7 CFR 245.12 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. 7 CFR 210 outlines the application requirements for participation in the National School Lunch Program (NSLP), and specifies that applications shall provide the State agency with sufficient information to determine eligibility. 7 CFR 225 requirements include: • the type of information that must be required in sponsor applications for participation; • sites that serve an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet the program's income standards; • the proposed site is not or will not be served in whole or in part by another site; • State agency requirements related to the approval of applications and determinations of eligibility; and • the process and requirements for claims for reimbursement (CFRs). 7 CFR 245 describes the action taken by State agencies related to the eligibility determination of individuals and special eligibility determinations of schools including Provision II and Community Eligible Provision (CEP) schools. These regulations outline how the School Food Authority (SFA) and State agency should collect and report eligibility information in the schools, and how that information should be used in establishing rates and percentages in CFRs. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, Summer Food Service Program (SFSP) and the Fresh Fruit and Vegetable Program. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions, and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit applications for participation in CNC programs and DOE is required to review every application and site information sheet to ensure that only eligible SFAs or sponsors participate in the programs. The Office of the State Auditor (OSA) tested 48 applications and found instances that did not align with program regulations for NSLP and SFSP, as follows: National School Lunch Program Applications to participate in child nutrition programs must include attestations and written agreement to the regulations set forth in 7 CFR 210 and 7 CFR 245. Agreements must be signed and returned to Child Nutrition Services (CNS) prior to meal service and the submission of a CFR by the SFA. OSA tested 32 applications from SFAs and sponsors for participation in NSLP and identified six applications that were not complete or were approved prior to participation in the program, as follows: • Three applications were approved for participation with missing information, including: o one application missing an agreement for participation in CEP; o one application not indicating the year of operation; and o one application missing the signature of the SFA superintendent. • Two applications were submitted after participation in the program had begun. • One application was missing the meal pattern agreement attestation that made them eligible for the eight-cent performance-based reimbursement for every lunch served and was also submitted after participation in the program had begun. OSA selected a non-statistical random sample. Summer Food Service Program While SFAs may operate SFSP, residential and non-residential day camps, units of local, municipal, county or State governments, and private nonprofit organizations may also participate in the program; these providers are called sponsors. Sponsors must submit a written application to CNS by June 15 to participate in the program. Sponsors operate individual sites, and sponsor applications must include site sheets for each site. OSA tested 16 applications from sponsors for participation in SFSP and found: • four applications were revised and the revisions were erroneously applied to prior months, resulting in questioned costs totaling $1,767 for meals served prior to approved revisions; and • eleven applications, including two with more than one error, that were approved with sites that did not meet the eligibility criteria, as follows: o Four sponsors had sites where CNS incorrectly categorized non-residential day camps as open sites, which allowed the site to use the area eligibility determination instead of using individual eligibility determinations, resulting in questioned costs totaling $68,342 for meals served without eligibility information provided. o Two sponsors of camps did not provide the number of eligible children for each session at their sites prior to submitting a CFR, resulting in questioned costs totaling $63,493 for meals served without eligibility information provided. o Three sponsors had four sites that used incorrect school or census data to demonstrate eligibility, resulting in one site that was ineligible for participation, and questioned costs totaling $33,682 for the operation of an ineligible site. o One application was approved with a breakfast time of 11:30 a.m.; there was no documentation to support that this meal was served near the site’s opening time as required by regulations, resulting in questioned costs totaling $8,635 for meals that do meet meal time requirements. o Three applications were approved for non-congregate sites that did not include procedures to ensure duplicate meals would not be distributed. One sponsor had seven open sites with overlapping meal times within a quarter-mile radius. OSA selected a non-statistical random sample. In addition, OSA performed analytical procedures over SFSP site classifications and found: • 58 sites from 32 sponsors did not apply eligibility criteria for camp participation, as follows: o 29 sites were classified as open sites or closed enrolled sites when additional information on the application or publicly available information indicated that the program met the definition of camps provided at 7 CFR 225; these sites used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $208,142. o 9 sites indicated they were camps; however, they were classified as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible children, resulting in questioned costs totaling $100,379. o 13 sites indicated they were camps; however, their applications were not revised to include actual eligibility counts for each session prior to submission of CFRs, resulting in questioned costs totaling $82,567. o 7 sites described camp activities in their description of operations, but classified themselves as open sites or closed enrolled sites that used area eligibility to claim reimbursement for all meals served instead of only the meals served to eligible campers, resulting in questioned costs totaling $48,224. • 16 sponsors had site revisions approved by CNS that added operating days, increased capacities, changed meal types, added meals, or added non-congregate operations to a prior month. CNS permitted sponsors to include those revisions in the prior month’s CFR which were not in accordance with the agreement in place at the time of service, resulting in questioned costs totaling $13,693. Context: CNS processed $55.8 million in CFRs for NSLP, and $2.8 million in CFRs for SFSP in fiscal year 2024. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • CNC participation by ineligible SFAs or sponsors • Known questioned costs • Potential future questioned costs and disallowances • Noncompliance with Federal regulations Recommendation: We recommend that CNS revise policies and procedures to ensure: • SFSP site information sheet revisions prohibit the sponsor from using the revised information in a claim for a prior month; • site classifications appropriately identify camps, consistent with Federal regulations; and • site information sheets contain non-congregate plans that include required information. Additionally, we recommend that CNS enhance oversight to ensure: • all required documents for applications are complete and signed prior to meal service; • session-specific eligibility information is available on the site information sheets for camps; and • the eligibility of the locations of non-congregate sites is properly supported. Corrective Action Plan: See F-15 Management’s Response: The Department agrees with this finding. Procedures for “Application Approvals” will be delineated regarding application and claim revisions, Site classification, non-congregate plan requirements, Eligibility criteria and back up documentation, and all requirement documents will be adequately reviewed. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-05)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-031) Title: Internal control over CNC claim reimbursements needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Allowable costs/cost principles Reporting Type of Finding: Material weakness Material noncompliance Questioned costs Known Questioned Costs: ALN 10.555 $1,605 ALN 10.582 $9,535 ALN 10.559 $117,259 Likely Questioned Costs: Undeterminable; due to the variety of site types in the test population and varied meal claim counts, an error rate cannot be applied to the population and a projection of questioned costs cannot be reasonably estimated. Criteria: 2 CFR 200.303; 2 CFR 200.403; 7 CFR 210.7 and .8; 7 CFR 225.6, .9, and .16; Richard B. Russell National School Lunch Act, Section 19; U.S. Department of Agriculture Fresh Fruit and Vegetable Handbook The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. To be allowable under Federal awards, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. 7 CFR 210.7 National School Lunch Program (NSLP) claims for reimbursement (CFRs) must be based on lunch counts taken daily at the point of service (POS), which correctly identify the number of free, reduced price, and paid lunches served to eligible children. 7 CFR 210.8 (NSLP) on a monthly basis, the State agency shall, at a minimum, compare the number of free and reduced price lunches claimed to the number of children approved for free and reduced price lunches enrolled in the School Food Authority (SFA) for the month of October, and multiply that number by the days of operation and the attendance factor employed by the SFA. At its discretion, the State agency may conduct this comparison against data which reflects the number of children approved for free and reduced price lunches for a more current month(s). 7 CFR 225.6 Summer Food Service Program (SFSP) required information must be on a site information sheet that the State agency must provide to the sponsor for approval by the State agency prior to participation in SFSP, including estimated meal counts, types of meals, meal service times, and procedures to ensure duplicate meals are not distributed at non-congregate sites. In order to approve a site, the area where the site proposes to serve is not or will not be served in whole or in part by another site. 7 CFR 225.9 (SFSP) outlines that payments to a sponsor must equal the amount derived by multiplying the number of eligible meals, by type, actually served under the sponsor's program to eligible children by the current applicable reimbursement rate for each meal type. Sponsors must be eligible to receive additional reimbursement for each meal served to participating children at rural or self-preparation sites. 7 CFR 225.16 (SFSP) meals served outside of the meal time listed on the sponsor’s application are not eligible for reimbursement. Sponsors agree in writing to claim reimbursement only for the types of meals specified in the agreement that are served. Section 19 of the Richard B. Russell National School Lunch Act (NSLA) states that the per-pupil grant provided to a school under the Fresh Fruit and Vegetable Program (FFVP) shall be not less than $50, nor more than $75. U.S. Department of Agriculture’s (USDA) FFVP Handbook, referenced as guidance in Policy Memo SP 17-2023, states that all nonfood costs must be carefully reviewed and deemed reasonable. Condition: The Child Nutrition Cluster (CNC) includes the School Breakfast Program, NSLP, Special Milk Program for Children, SFSP and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools, residential childcare institutions and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage the consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE provides benefits to each SFA or sponsor on a reimbursement basis. SFAs and sponsors must submit claims for reimbursement based on actual meals served for the month and permissible fresh fruits and vegetables utilizing the Child Nutrition Program (CNPWeb) system. The Department is required to review each SFA’s or sponsor’s CFR to ensure that monthly claims are limited to the number of meals served to eligible children and that the cost of the fresh fruits and vegetables are allowable. Once the claims are approved, claims are reimbursed based on the rates that are programmed in the CNPWeb system. The Office of the State Auditor (OSA) tested CFRs for the CNC and found instances that did not align with program regulations for NSLP, FFVP, and SFSP, as follows: National School Lunch Program CNS must perform procedures as outlined in Federal regulations, including a review of CFRs on a monthly basis through analysis utilizing a product of the enrollment information from the month of October multiplied by the days of operation and the attendance factor employed by the SFA. OSA procedures identified that CNS did not review or perform analysis on CFRs on a monthly basis as required. OSA tested 60 CFRs and identified nine CFRs from five SFAs where eligibility information entered on the CFR varied significantly from the information provided and verified by the SFA in October 2023. In order to verify the allowability of the claims identified, OSA requested supporting documentation from those five SFAs. OSA compared the eligibility counts from the CFR, the SFA’s POS reports, the SFA’s October data provided to CNS, and the SFA’s master list of eligible students for the month of the CFR and found: • five POS reports with eligibility counts that conflicted with the master eligibility list provided by the SFA for that month, and with the number of eligible children reported on the CFR, resulting in questioned costs totaling $897; • one POS report from October with eligibility counts that matched the site CFR, but did not match the master eligibility list provided by the SFA, or the data reported to CNS by the SFA for the same month, resulting in questioned costs totaling $708; and • documentation for three CFRs could not be provided. OSA selected a non-statistical random sample. Fresh Fruit and Vegetable Program CNS ensures compliance with Federal regulations through the annual administrative review process. OSA tested 17 FFVP CFRs from the nine SFAs who had an administrative review in fiscal year 2024 and found: • nine claims from five SFAs had sites with nonfood costs that were not reviewed during the administrative review process. • for six of the nine SFAs, portions of the administrative review process were erroneously omitted; therefore, CNS did not review or examine the allowability for any FFVP CFRs for those six SFAs. OSA selected a non-statistical random sample. The FFVP fiscal year is October 1 to September 30; therefore, though schools may begin the school year with unspent funds from the prior school year, these funds must be spent by September 30. OSA tested 19 FFVP SFAs that participated in both fiscal year 2023 and 2024 and found that three SFAs exceeded their fiscal year 2023 allocation in September 2023. CNS did not detect or correct this allocation issue until OSA inquired in September 2024. OSA selected a non-statistical random sample. Section 19 of the Richard B. Russell NSLA requires that FFVP allocations made by CNS result in a per-pupil grant not less than $50, nor more than $75 to participating SFAs. OSA tested 19 SFAs that participated in FFVP in fiscal year 2024 and found that 14 SFAs had manual allocation adjustments which resulted in ten per-pupil allocations that were not between $50 and $75 per pupil, ranging from $24 per pupil to $109 per pupil. The allocation of funds over $75 per pupil resulted in questioned costs of $9,535. OSA selected a non-statistical random sample. Summer Food Service Program CNS requires applications from sponsors that include individual site sheets. The information on the sheet must include the estimated number of meals, types of meals to be served, and meal service times. Meal service times must align with the approved application at the time the meals are served. Non-congregate sites must provide enough detail to ensure the area where the site proposes to serve meets certain criteria, including verification that the site: • is rural; • is not or will not be served in whole or in part by another site; • serves an area in which poor economic conditions exist or is approved for reimbursement only for meals served free to enrolled children who meet income standards; and • has procedures to ensure that duplicate meals are not served to any child. Residential and non-residential camps must include in their site sheets the number of children enrolled in each session who meet income standards prior to filing the camp’s CFR for each session. OSA tested 39 SFSP CFRs and found: • nine residential or non-residential camp CFRs that did not include the number of children enrolled in each session who met income standards prior to filing their CFR, resulting in questioned costs totaling $95,902. • two CFRs to non-congregate sites not located in an area where poor economic conditions exist per USDA data. The ineligible sites resulted in questioned costs totaling $15,536. • four CFRs included revised information from the site sheet that did not reflect the conditions at the time the meals were served. The revisions submitted between the meal service and submission of the CFR included an increase in capacity, an addition of meal types, and an addition of operating days, resulting in questioned costs totaling $5,821. • five CFRs to non-congregate sites that did not have documented procedures to prevent duplicate meal service on the site sheet. OSA selected a non-statistical random sample. Additionally, SFSP has two tiers of administrative rates for reimbursement, self-prep and vended. Sites classified as rural are all reimbursed at the highest rate, but sites classified as urban can either be reimbursed at the higher rate if they serve self-prep meals, or at the lower rate if their meals are vended. CNS previously determined that the field on the application for the sponsor to select whether the meal served is vended or self-prep is not required in the CNPWeb system. At that time, CNS submitted a ticket to request a change to the CNPWeb system to require the sponsor to select a meal type in that field on future applications; however, because that information was not required previously, CNS does not have assurance that urban sites that did not select self-prep or vended are being reimbursed at the correct rate. Furthermore, for each month of operation, CNS must report the number of meals served by meal type and sponsor type to USDA Food Nutrition Services (FNS) on the FNS-418 report. CNS does not have assurance that their default classification of urban sites as self-prep when the field was left blank is accurate for FNS-418 reporting. Context: In fiscal year 2024, CNS processed CFRs totaling: • $55.8 million under NSLP; • $2.8 million under FFVP; and • $2.8 million under SFSP. Cause: • Lack of adequate policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Known questioned costs • Potential future questioned costs and disallowances • Potential incorrect rates of reimbursement paid to SFAs and sponsors • Inaccurate FNS-418 reports submitted to FNS Recommendation: We recommend that CNS enhance policies and procedures to: • require a review of CFRs on a monthly basis in accordance with Federal regulations; • ensure all required information is included in the applications and approved prior to participation; • review and approve area eligibility for non-congregate sites; • require inclusion of self-prep or vended meal types and non-congregate plans on site information sheets that document procedures to prevent duplicate meal service; • ensure session-specific eligibility information is received prior to claim approval for camp sites; and • ensure that site information sheet revisions prohibit the sponsor from using the revised information in a claim for the prior month. In addition, we recommend that CNS enhance oversight over FFVP to ensure: • claims with nonfood costs are reasonable; • allocation amounts remain within $50 to $75 per pupil; and • administrative reviews conducted by CNS include FFVP allowability reviews. Corrective Action Plan: See F-16 Management’s Response: The Department partially agrees with this finding. These findings come from various programs and are correctly outlined in the Condition. However, the Department disagrees with the first bullet in the Recommendation regarding the review of CFRs monthly and has contacted the Northeast Regional Office of the USDA for clarification. Additionally, we disagree with the first bullet point regarding non-food costs in the FFVP program, as it’s addressed in the Administrative Review process. The Department has developed a corrective action plan to address the remaining recommendations. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 Auditor’s Concluding Remarks: 7 CFR 210.8(b)(2) provides detailed requirements outlining the minimum CFR monthly claim review procedures that CNS must perform. CNS has not implemented required procedures, and erroneous CFRs are not detected or corrected, resulting in questioned costs and potential disallowances. In addition, CNS asserts that FFVP nonfood costs are addressed as part of the Administrative Review process; however, OSA identified a material weakness and material noncompliance as issued in finding 2024-032 Internal control over CNC subrecipient monitoring procedures needs improvement. The finding reports that six of the nine Administrative Reviews tested for FFVP inappropriately omitted Federally required steps and that a cost analysis over nonfood costs was not performed. The finding remains as stated. (State Number: 24-1203-02)
(2024-032) Title: Internal control over CNC subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332; 7 CFR 210.18; 7 CFR 225.7; U.S. Department of Agriculture Policy Memo SP 46-2015 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. The Department must conduct administrative reviews of School Food Authorities (SFAs) participating in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). These procedures must also be followed, as applicable, to conduct administrative reviews of the afterschool snacks, Special Milk Program (SMP) and the Fresh Fruit and Vegetable Program (FFVP). Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Corrective action may be provided at the time of the review; however, it must be postmarked or submitted to the State agency electronically no later than 30 days from the deadline for completion of each required corrective action. The State agency must maintain any documented corrective action on file for review by the Food and Nutrition Service (FNS). The Department must withhold all program payments to a SFA if: • documented corrective action for critical area violations is not provided with deadlines specified; or • corrective action for critical area violations was not completed. FNS may suspend or withhold program payments, in whole or in part, to those states failing to withhold payments in accordance with regulations and may withhold administrative funds. The Department must review sponsors to ensure compliance with Summer Food Service Program (SFSP) regulations. The Department is required to conduct a review of base year certification and benefit issuance documentation for any SFA requesting approval to participate in NSLP or SBP using U.S. Department of Agriculture (USDA) Special Provision 2, which is a provision established to reduce application burdens and simplify claim procedures. The review must occur at some point during the base year. If errors are identified as a result of the review, the Department must adjust all of the SFA’s closed claims that occurred in the current school year. Condition: The Child Nutrition Cluster (CNC) includes the NSLP, SBP, SMP, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE partners with local SFAs and sponsors to provide benefits to school-aged children. DOE has assigned subrecipient monitoring responsibilities, which include administrative reviews and other reviews as needed, to the Child Nutrition Services (CNS) division. Administrative reviews of all SFAs are required at least once every five years; however, regulations also specify that high-risk SFAs must receive targeted follow-up within two years. CNS utilizes a spreadsheet to track and facilitate the reviews, and a USDA questionnaire to document the completion of the review. CNS does not have a mechanism to centrally track the high-risk SFAs to ensure follow-up occurs. CNS is required to retain documentation to support all elements of the administrative reviews and to demonstrate the SFA’s compliance with the program, even if corrective action occurs onsite during the review. The Office of the State Auditor (OSA) tested 29 administrative reviews completed by CNS and found: • Performance Standard 1 findings, deemed critical findings by USDA, were identified in four reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for one review. • Performance Standard 2 findings, also deemed critical by USDA, were identified in three reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for two reviews. • corrective action completed onsite was indicated in five reviews; however, CNS could not provide documentation to support the corrective action. • corrective action for three reviews did not fully address the deficiencies noted. • corrective action for two reviews was received more than 30 days late. • 12 reviews were closed; however, corrective action remained outstanding. • one sponsor submitted corrective action in October 2023, but as of audit testing in March 2025, CNS had not notified the sponsor of the approval and had not closed the sponsor’s review. • corrective action submitted from two SFAs was not approved, and the SFAs were not notified until nine months after their submission. • the review tracking spreadsheet was not fully completed or conflicted with information obtained from the administrative review for 16 reviews. • questionnaires were not fully completed for seven reviews. • USDA questionnaire sections related to FFVP and SMP were erroneously excluded for eight reviews. • the date for required corrective action to be provided was omitted for seven reviews. • one review was erroneously excluded from the review tracking spreadsheet. In addition to administrative reviews, CNS must perform base year reviews for all SFAs that have applied to participate in USDA Special Provision 2. These base year reviews provide the required information necessary to determine the level of claims the SFA may submit in the subsequent three years. After completion of the base year review, a letter detailing the results, including any adjustments to previously submitted claims, is provided to the SFA. The SFA is required to adjust claims and enrollment data through the claim revision process and CNS is responsible for verifying that the appropriate revisions have been completed. In fiscal year 2024, CNS identified 17 SFAs that required a base year review. OSA tested four base year reviews and identified three SFAs that did not properly revise claims and enrollment data, and CNS did not verify the accuracy of the revisions completed by the SFAs. In addition, one SFA had an eligibility determination that was not supported by the application. The income amount included in the application exceeded income requirements for reduced-price eligibility, but the SFA categorized the applicant as eligible for reduced-price meals. In the base year review, the application was not recategorized by CNS, and claims were not revised to match the eligibility determination. OSA cannot determine if unallowable costs exist through the audit of subrecipient monitoring activities, as required information was not collected. OSA has questioned costs through the audit of allowable costs/costs principles and eligibility, see findings 2024-031 Internal control over CNC reimbursements needs improvement and 2024-030 Internal control over CNC eligibility needs improvement, respectively. OSA selected non-statistical random samples. Context: In fiscal year 2024, CNC expenditures totaled approximately $68 million, of which $67.6 million was provided to 241 SFAs and sponsors. Cause: • Lack of policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. • Potential questioned costs and disallowances. Base year reviews provide authorization for the level of allowable claims the SFA can claim in subsequent periods. Without a base year review and necessary revisions, SFAs could be underclaiming or overclaiming costs. Recommendation: We recommend that the Department implement policies and procedures and increase oversight to ensure that: • reviews are completed as required and supporting documentation is retained; • high-risk SFAs are tracked and considered in planning follow-up reviews; • SFAs revise claims appropriately after a base year review; and • CNS verifies that claim adjustments occur as necessary. Corrective Action Plan: See F-17 Management’s Response: The Department agrees with this finding. The Department will improve tracking and create procedures to evaluate the Administrative Review Processes for the team. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-06)
(2024-032) Title: Internal control over CNC subrecipient monitoring procedures needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Education State Bureau: Child Nutrition Services Federal Agency: U.S. Department of Agriculture Assistance Listing Title: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.556, 10.559, 10.582 Federal Award Identification Number: See E-77 to E-78 Compliance Area: Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.332; 7 CFR 210.18; 7 CFR 225.7; U.S. Department of Agriculture Policy Memo SP 46-2015 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department must monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. The Department must conduct administrative reviews of School Food Authorities (SFAs) participating in the National School Lunch Program (NSLP) and the School Breakfast Program (SBP). These procedures must also be followed, as applicable, to conduct administrative reviews of the afterschool snacks, Special Milk Program (SMP) and the Fresh Fruit and Vegetable Program (FFVP). Documented corrective action is required for any degree of violation of general or critical areas identified in an administrative review. Corrective action may be provided at the time of the review; however, it must be postmarked or submitted to the State agency electronically no later than 30 days from the deadline for completion of each required corrective action. The State agency must maintain any documented corrective action on file for review by the Food and Nutrition Service (FNS). The Department must withhold all program payments to a SFA if: • documented corrective action for critical area violations is not provided with deadlines specified; or • corrective action for critical area violations was not completed. FNS may suspend or withhold program payments, in whole or in part, to those states failing to withhold payments in accordance with regulations and may withhold administrative funds. The Department must review sponsors to ensure compliance with Summer Food Service Program (SFSP) regulations. The Department is required to conduct a review of base year certification and benefit issuance documentation for any SFA requesting approval to participate in NSLP or SBP using U.S. Department of Agriculture (USDA) Special Provision 2, which is a provision established to reduce application burdens and simplify claim procedures. The review must occur at some point during the base year. If errors are identified as a result of the review, the Department must adjust all of the SFA’s closed claims that occurred in the current school year. Condition: The Child Nutrition Cluster (CNC) includes the NSLP, SBP, SMP, SFSP, and FFVP. The objectives of the programs are to provide nutritious meals to eligible children in schools and summer food programs; to foster healthy eating habits by providing fresh fruits and vegetables to children attending elementary schools; and to encourage consumption of nutritious agriculture commodities. The Department of Education (DOE) is responsible for the administration of child nutrition programs for the State. DOE partners with local SFAs and sponsors to provide benefits to school-aged children. DOE has assigned subrecipient monitoring responsibilities, which include administrative reviews and other reviews as needed, to the Child Nutrition Services (CNS) division. Administrative reviews of all SFAs are required at least once every five years; however, regulations also specify that high-risk SFAs must receive targeted follow-up within two years. CNS utilizes a spreadsheet to track and facilitate the reviews, and a USDA questionnaire to document the completion of the review. CNS does not have a mechanism to centrally track the high-risk SFAs to ensure follow-up occurs. CNS is required to retain documentation to support all elements of the administrative reviews and to demonstrate the SFA’s compliance with the program, even if corrective action occurs onsite during the review. The Office of the State Auditor (OSA) tested 29 administrative reviews completed by CNS and found: • Performance Standard 1 findings, deemed critical findings by USDA, were identified in four reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for one review. • Performance Standard 2 findings, also deemed critical by USDA, were identified in three reviews, but were not tracked for follow-up. In addition, corrective action was not provided within 30 days for two reviews. • corrective action completed onsite was indicated in five reviews; however, CNS could not provide documentation to support the corrective action. • corrective action for three reviews did not fully address the deficiencies noted. • corrective action for two reviews was received more than 30 days late. • 12 reviews were closed; however, corrective action remained outstanding. • one sponsor submitted corrective action in October 2023, but as of audit testing in March 2025, CNS had not notified the sponsor of the approval and had not closed the sponsor’s review. • corrective action submitted from two SFAs was not approved, and the SFAs were not notified until nine months after their submission. • the review tracking spreadsheet was not fully completed or conflicted with information obtained from the administrative review for 16 reviews. • questionnaires were not fully completed for seven reviews. • USDA questionnaire sections related to FFVP and SMP were erroneously excluded for eight reviews. • the date for required corrective action to be provided was omitted for seven reviews. • one review was erroneously excluded from the review tracking spreadsheet. In addition to administrative reviews, CNS must perform base year reviews for all SFAs that have applied to participate in USDA Special Provision 2. These base year reviews provide the required information necessary to determine the level of claims the SFA may submit in the subsequent three years. After completion of the base year review, a letter detailing the results, including any adjustments to previously submitted claims, is provided to the SFA. The SFA is required to adjust claims and enrollment data through the claim revision process and CNS is responsible for verifying that the appropriate revisions have been completed. In fiscal year 2024, CNS identified 17 SFAs that required a base year review. OSA tested four base year reviews and identified three SFAs that did not properly revise claims and enrollment data, and CNS did not verify the accuracy of the revisions completed by the SFAs. In addition, one SFA had an eligibility determination that was not supported by the application. The income amount included in the application exceeded income requirements for reduced-price eligibility, but the SFA categorized the applicant as eligible for reduced-price meals. In the base year review, the application was not recategorized by CNS, and claims were not revised to match the eligibility determination. OSA cannot determine if unallowable costs exist through the audit of subrecipient monitoring activities, as required information was not collected. OSA has questioned costs through the audit of allowable costs/costs principles and eligibility, see findings 2024-031 Internal control over CNC reimbursements needs improvement and 2024-030 Internal control over CNC eligibility needs improvement, respectively. OSA selected non-statistical random samples. Context: In fiscal year 2024, CNC expenditures totaled approximately $68 million, of which $67.6 million was provided to 241 SFAs and sponsors. Cause: • Lack of policies and procedures • Lack of supervisory oversight Effect: • Noncompliance with Federal regulations • Subrecipients may not be complying with Federal statutes, regulations, or the terms and conditions of the subaward. • Potential questioned costs and disallowances. Base year reviews provide authorization for the level of allowable claims the SFA can claim in subsequent periods. Without a base year review and necessary revisions, SFAs could be underclaiming or overclaiming costs. Recommendation: We recommend that the Department implement policies and procedures and increase oversight to ensure that: • reviews are completed as required and supporting documentation is retained; • high-risk SFAs are tracked and considered in planning follow-up reviews; • SFAs revise claims appropriately after a base year review; and • CNS verifies that claim adjustments occur as necessary. Corrective Action Plan: See F-17 Management’s Response: The Department agrees with this finding. The Department will improve tracking and create procedures to evaluate the Administrative Review Processes for the team. Contact: Jane McLucas, Director of Child Nutrition, DOE, 207-624-6880 (State Number: 24-1203-06)